1st Case to Use U.S. Safe Web Act Nets $3.7M in Fines to Spammers

Jul 6, 2009 2:45 PM PST
NEW YORK — In the first case to use the U.S. Safe Web Act, a federal judge has ordered key players in an international spam operation to repay the $3.7 million earned from promoting two health mainstream products.

The four-year-old act, which targets international perpetrators of Internet fraud as well as spam and spyware distribution, allows for easier exchange of information among the FTC and its foreign counterparts.

The FTC said the spammers promised that an extract of the hoodia gordonii plant would result in weight loss, and that a human-growth hormone pill would reverse aging. The claims were unsubstantiated, the FTC said, and violated both the FTC law and the CAN-SPAM Act.

Regulators said the operation used spam emails to drive unknowing consumers to sites selling the products, violating federal laws on false advertising. They say the emails had fake return addresses and used deceptive subject lines.

The FTC also claimed that operators also failed to provide an opt-out link or a physical address in the email.

The FTC settled with three defendants — Spear Systems and two individuals, one in the U.S. and one in Australia — in May 2008, and the new court orders apply to HBE Inc., two corporate defendants and two Canadian residents.

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